Bright future for refurb and retrofit
Although #construction output had been rising, helping boost the UK’s overall economic growth in the second and third quarter, this has ended abruptly in the fourth after growth fell by 3.3 percent.
While this may be mainly put down to the poor weather, hope is still out there for the industry, even though construction output is expected to continue to fall for the next two years before growth returns in 2013 (according to winter forecasts from the Construction Products Association).
This longer term hope comes from the fact that spending cuts will result in a shortage of prime office space by 2014, which will drive a mini-boom in #refurbishment and refitting in the public and private sectors. And interestingly, analysis by Glenigan for Construction News, shows a greater proportion of refurbishment work is already feeding through in these areas: in the second half of 2010, 49 percent of the £732m of new commercial starts involved some refurbishment.
This tallies with research by Savills, based on its activity survey of 200 developers. Director of European commercial research Mat Oakley said: “We’ve been seeing consistent month-on-month increase in refurbishment activity since 2009. It’s always the segment of the market that recovers first because it’s smaller and cheaper.” And, of course Plastic Surgeon, through the very act of repairing damaged items removes the need to replace them; thus reducing costs even further for developers.
Meanwhile sustainability – and the introduction of initiatives such as the Carbon Reduction Commitment, will now add about £8,000 to the energy bills of the 5,000 major property owners affected, which is expected to drive more retrofit work.
Contractors such as Willmott Dixon and ISG are certainly trying to encourage that trend.
With capital spending expected to fall dramatically in health and education – by 10 percent and 55 percent respectively by 2014 – it is inevitable that in these sectors we can expect to see a dramatic move away from new build.
This is despite the growing shortage of school places, which means existing educational establishments will need to be expanded in some way – interestingly, one model EC Harris has put forward is to convert under-used retail space such edge-of-town units, into schools.
The increase in fit-out work will undoubtedly lead to new companies springing up, as well as increase Plastic Surgeon’s workload. But as managing director of ISG’s fit-out business Darren Hill pointed out, to make it work it is essential “to be able to understand your customers’ business and be able to adapt to what makes them tick.”
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